Figuring out the steps that you need to take in order to e-file your 1099 forms for your business’s independent contractors requires you to understand why e-filing is the easier solution. Using tax software with e-filing capabilities provides small businesses with:
- A quicker turnaround on returns
- Improved accuracy and fewer corrections needed
- A money-saving solution
- Less wasted resources
The IRS issues most refunds within 21 days for taxpayers who file electronically and select the direct deposit option. Processing paper returns can take six weeks or longer.
Reducing the amount of time that you spend filing and then submitting tax forms to the Internal Revenue Service will allow you to focus on other essential areas of your business. Investing in strong software will provide you with access to a complete database system while generating any of the essential 1099s, W-2s, and related forms.
Advanced Micro Solutions’ base W-2/1099 Forms Filer program can integrate with six optional add-on modules to create a full-accounting suite of tools. As the most affordable system on the market, our W-2/1099 Forms Filer can stand on its own or be paired with an E-Filer to simplify how users navigate each tax season.
How to Prepare For E-Filing 1099 Contractor Forms
Before you start e-filing your 1099 independent contractor forms, you will need to follow a few crucial steps. Following these steps will help better ensure your accuracy and compliance not only during a tax season but throughout the entire year.
Step 1: Gather what you need
Making sure that you have all of the essential information well before tax season helps eliminate some of the stress during that time of year. Waiting until the last minute to gather any necessary contractor tax information can lead to mistakes and oversights. Make sure that you collect:
- Legal names
- Addresses
- Taxpayer Identification Numbers (TINs)
- Total payments made for the prior tax year
- Completed W-9 forms
- Your business’s EIN and any filing information
Step 2: Make sure that you should be filing a 1099 form
There are times when it is obvious whether you need to file a 1099 or W-2 forms, but there are other instances that may have some more gray areas. There are some questions that you can ask yourself to help prevent yourself from mistakenly e-filing 1099 forms for contractors.
- Did you pay a contractor for a service rather than a product?
- Has the worker received $600 or more from you in the previous year for their services?
- Is the worker on your company’s payroll as an employee?
- Can you control how and precisely when they do their job?
- How did you pay them? (i.e.: check, cash, direct deposit)
It is surprisingly easy to misclassify employees and contractors, but doing so can lead to a lot of different complications. The next time that you need to e-file 1099 forms for contractors, review the IRS’ common law rules. These will help you to determine how much control you have as an employer and the extent of your workers’ independence.
Step 3: Select the best method for filing your forms
How a business files its 1099 and W-2 forms will depend on a few factors, including their:
- Size
- Number of forms
- Budget
Certain businesses might e-file through the IRS FIRE system or the IRS IRIS platform. The IRS FIRE system is a good option if you can handle strict compliance requirements and can handle a less-than-user-friendly system. The IRS IRIS platform has limited features, but it is free and a good option for certain users who do not need as many specialized tools.
Your other options for e-filing can include:
- Using a software provider (a good option for lower-tech small businesses)
- Hiring an accountant or bookkeeper (worthwhile if you do not have the time or expertise to handle all of the tax filing details)
There is a less than 1% error rate for e-filed returns compared to 21% for paper returns.
Can AMS Software Handle E-Filing Requirements?
Small businesses on a budget can get the most out of our software that is designed with their needs in mind. Our team of experts are available to offer support and clarify software questions as you have them rather than outsourcing support to a third-party call center.
Download our free 1099-etc Demo software today and see how the affordable and almost fully functional version of our system will provide you with an E-File Direct add-on module or E-File Services via a third-party vendor.
E-File Direct
- Flat fee
- Unlimited number of form filings
- Users can verify, view, and print files
E-File Services
- Volume pricing (fee per form)
- Forms are e-filed through a third-party vendor
- Different service levels available